from the Sixth Annual New York State Conference
on Private Property Rights
November 16, 2002, Albany, New York

Eminent Domain  Current Status,
Future Directions
James E. Morgan

Thank you, Carol. I am going to ask for your indulgence for
a moment and I am going to do something that I rarely do. I am
going to read you the introduction, which is the first section,
Section 101, of the eminent domain procedure law. I want you to
know what the stated purpose of this law is, and Ill explain
to your how it is applied and misapplied and not applied selectively.

It is the purpose of this law to provide the exclusive
procedure by which property shall be acquired by exercise of
the power of eminent domain in New York State, to assure that
just compensation shall be paid to those persons whose property
rights are acquired by the exercise of the power of eminent domain,
to establish opportunity for public participation in the planning
of public projects necessitating the exercise of eminent domain,
to give due regard to the need to acquire property for public
use as well as the legitimate interest of private property owners,
local communities, the quality of the environment, and to that
end to promote, facilitate, recognition of careful consideration
of those interests to encourage settlement of claims for just
compensation, expedite payments to property owners, and to establish
rules to reduce litigation and to assure equal treatment to all
property owners.

Who could disagree with those words? The reality of it is that
in the State of New York there is a fairly just procedure set
forth in this volume for the State to acquire land for public
purpose. The key to that has been, what is the definition of public
purpose? That obviously is defined by the powers that be. Now,
this statute, as in other states, has been upheld on the constitutional
challenges over the years in numerous states and federal courts.
The most recent cases had to do with the meaning of public
purpose. As many of you may be aware of  it is more
true in urban areas but we have heard references to Florida today,
and it is been going on in the state of New York, which I will
get to in a couple of minutes  where a public purpose is
defined by environmentalists or whomever, then they do their best
to insure that this statute, or its equivalent where the property
resides, is not applied. This statute provides that each side
gets appraisals, it provides for judicial process where those
appraisals can be reviewed, a finding is made, a court decision
rendered, and, in theory, just compensation be paid by the public
entity to the property owner.

What has happened is that this has been used, for example,
in numerous states including this state, for urban renewal process
where what they term blighted neighborhoods can be
taken by condemnation process and then sort of tossed off into
quasi-public corporation, or, in some cases, strictly private
organizations, for development. As I said, initially these statutes
were applied with great vigor starting in the sixties and seventies,
and they were upheld against most challenges.

Today we are seeing, not a retreat from the broad-based power,
but the courts have been showing more willingness to define what
is a public purpose. When you find that the government is basically
taking property from some private individuals and giving it to
private corporations for development for what are at best quasi
public purposes, the courts have in certain instances stepped
in and said, no, that you must apply proper eminent domain procedure,
this is not a public purpose, and blocked the condemnation.
But again you are fighting city hall. Where the courts are looking
at it today is on very narrow grounds, looking to see where the
power or procedures have been imperfectly applied.

What I meant was that this statute is more observed in the
breach than in what it actually is. For example, we represent
the Civil Property Rights Association, which consists of several
hundred property owners on Long Island. This property was basically
taken from them in 1993 through the legislatures enactment
of the Pine Barrens Act. Basically this places 50,000 acres of
privately owned property in whats called the core
area, and that core area is subject to the control of the
Pine Barrens Commission, basically prohibiting all forms of development.
In theory, agriculture is allowed, but that is something we are
testing in court at this moment. The statute says agriculture
is a permitted use; however, you have to get a hardship amendment,
a hardship permit granted to conduct agriculture in this same
area. And that process, of course, is set forth in that. We took
over the case in 2000. The case is going to be argued again in
the Second Circuit appeals court sometime; I would say within
the next two to three months. We have had the case perfected for
three months, and we have not had a date set for argument.

What has been the key to that case is that these people are
allowed to continue to pay taxes at full assessment even though
there is a privilege in the statute that allows the towns to lower
the assessments. But they continue to pay taxes at full assessment
value for the privilege of owning property that they can literally
do nothing with. The groups have simply cut off the transportation
to the property. Nature Conservancy and others have actually blocked
the roads, public roads. We can prove this. It is not something
that is not provable. We can prove it in court if we can ever
get a court to listen.

Our clients would not have a problem per se if they had applied
the eminent domain procedure law, but instead they created an
unofficial system which allows part of the compensation theory
which allows, you have heard it referred to before, something
called TDR, transfer of development rights. This is a theory that
for a certain acreage of land you will get a, usually fractional,
development right that is sent to what is called a receiving area
where you get supposedly beneficial zoning treatment by the local
community. I am summarizing a very elaborate process, but these
TDRs are purchased by the Pine Barrens Commission and resold at
public auction to developers. Theyve been purchased at an
average of between $5,000 and $7,000 for a full TDR from private
landowners. They have no where else go with their property. They
cant sell it. They hold the property and continue to pay
taxes. They sell this for $5,000 to $7,000 and it is resold at
public auction for values exceeding $45,000.

We have asked several times where does the money go, the difference
between what the property owner received and what the government
entity received? In theory, it goes back into the TDR program.
If you look at the balance sheets, it disappears. Its in
somebodys account. I hope it is a public entity, but I dont
know. All our clients would ask for would be the application of
the eminent domain procedures law, which would allow them to litigate
the value of the land. Instead, they get this artificial program,
TDRs. But you cannot sell your own TDR to a private individual.
You can only sell it to the Pine Barrens Commission. Its
sort of a captive audience; you see, they can pay precisely what
they value it at. And they have paid that. They have been putting
experts from Florida, who have testified at the Congressional
level previously to this program being established, who said that
the TDR program does not really work because it is not just and
fair compensation. This is the same expert that helped develop
the valuation for the TDRs that people have been subject to.

The eminent domain procedures law was enacted to protect the
interests of the private property owner. Ive read you the
purpose. That purpose is backed up by the Constitution of the
United States. No person should be deprived of property without
due process of law and fair compensation. But, in reality, theres
alliance that has been going on between such groups  again,
this is a common theme that you have heard all day  between
The Nature Conservancy, land trusts , other not-for-profits.

The State of New York has raised this to a very interesting
thing that we are working on developing a challenge to. They partnered
themselves with these not-for- profits to escape or circumvent
the protections of this very statute. The reason the Pine Barrens
Commission with the people on Long Island did not put in for eminent
domain is because they were afraid they would have to pay fair
market value, which is what they should pay.

You know, we stand in court and represent these individuals,
who, some are, well to do. Most are, I would say the average age
of our clients runs close to 80. One family has owned the property
for 105 years. Most of them have either inherited it or carried
it forward for generations. The idea is an investment or a place
for their children to build or something like this. All we hear
from the state attorney generals office is, you are endangering
the environment, you represent land speculators, and all this,
and you are trying to pollute the land. The people can do nothing
with the land but pay taxes on it. Thats gratefully accepted,
of course.

Again, there is a statute on the books that is designed to
provide a fair means, but the governments excuse for avoiding
the use of this statute is, it costs too much money. So they have
devised new and different means of compensation including the
TDR program I just described to you, where you have to sell to
a government entity. The developers would pay the private owners
probably the same price that they bid at the public auction, because
what the Pine Barrens Commission has done over the last eight
years is taken basically all the remaining private property except
for about 3,200 acres that is still in private hands, and 90 percent
of that is owned by our clients. They have taken that and it has
gone either into not-for-profits or the State or the county or
the Pine Barrens Commission itself. These people continue to pay
taxes, and any number of them have told me they would rather pay
taxes until they are gone, than to give up. All they seek is fair
and just compensation, and this statute was enacted to provide
that. But in no way, shape or form has the State let it be applied.

There is actually a clause in the Pine Barrens Commission statute
that allows for use of eminent domain if it can be shown that
the property is taken. Of course, there is an elaborate procedure
you are supposed to go through for that. This property has already
been taken. This alliance between the not-for-profits and the
State, allowing them to circumvent the application of this statute,
benefits the government. It benefits the not-for-profit, because,
we can prove, for example, in large Adirondack purchases the State
has participated in from such groups as the Champion properties
and the Diamond properties and several others  I mean Champion
property which consisted of the purchase of a conservation easement
on 110,000 acres plus another outright 29,000-acre purchase in
fee where the state paid $29 million where the private outfit
the day before had paid the Champion company $25 million approximately.
There is approximately 20 percent markup for one days stewardship.
These are the same groups that are given the ability to enforce
conservation easements, if you read the statutes.

There is something very wrong with the system. Eminent domain
procedures law may not be a perfect statute. It has been applied
historically through State acquisitions for, say, such things
as the New York State Freeway, the highway system, and other things
like this. If properly applied, the people may not feel they have
gotten full compensation, but they have gotten at least the compensation
that in theory a neutral body, a judge in a court of law, has
given them. However, it is not really applied except in very limited
circumstances, and the future of where eminent domain procedure
law goes is going to depend on new court challenges in the future.
Thank you.
(applause)

***

Carol LaGrasse: Thank you very much. What an interesting final
point that the future depends upon what we do!

Questions and Answers (Excerpts)

Ms. LaGrasse: In representing property owners in the Long Island
Pine Barrens, Jim Morgan has re-invigorated an old case by a miracle
that you would never think a judge would have allowed back in
court, because it sat so long on account of the illness of the
lead attorney. There are two more cases on behalf of the Long
Island Pine Barrens owners that have had no compensation although
their properties is zoned for zero use and TDRs have been offered.
He has also been litigating for the people in the Town of Hardenburgh
because of the unequal treatment of similarly situated landowners.
They have only 198 people, but they pay so much taxes. Do you
know how much they pay per landowner? A phenomenal amount of property
taxes even though they only send a few students to school.

Mr. Morgan: There are two students in one district and for
that district it is $835,000 in school taxes.

Ms. LaGrasse: Can you imagine that! So this is the kind of
litigation he has been willing to take on.

Mr. Morgan: Three students in the school districts.

Ms. LaGrasse: And he has taken Joe Hermes case. Joe is
back there. Canada lake, the same lake where the former chairman
of the APA has his property and a couple other noteworthy people
in the environmental movement.

Thank you very much for speaking to us today.

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